Monday
Apr262010
Are Dark Clouds Gathering on the Apple Sunny Sky Horizon? $AAPL
Monday, April 26, 2010 at 11:04AMWritten by Michael Bigger. Follow me on Twitter.
Do you remember the day-trading commercial featuring a guy named Stewart in Ameritrade: Let's Light This Candle? What about the Morgan Stanley advisor weeping at the wedding ceremony or the 2009 Citigroup’s ad in Barron’s emphasizing its two hundred years of investment wisdom?
Why I am bringing up these ads? These tidbits of information reveal a great deal about a company's culture, and they are often a warning sign of some big stock gaps to come.
To prove my point, compare the annual letter to shareholders of a company such as Amazon.com with its Wall Street counterparts before the crisis. The difference is stunning. Amazon.com’s letters emphasize obsessing about the customers while Wall Street pimped their capabilities. Wall Street's extreme hubris was followed by a total collapse in the share price of most financial companies.
We would have avoided many mistakes in our investment careers if we had kept a closer watch on the culture temperatures of our portfolio companies.
Today, I want to bring to your attention some warning signs I see with the darling of all investors: Apple.
What are the specific issues troubling me about Apple?
• Steve Jobs’ statement about people not reading anymore.
• Apple’s deal with publishers forcing higher e-book prices and taxes on customers.
• The whole Genius concept sounds arrogant to me.
Many people are pinning their purchase of Apple shares on the following premises: Apple can do no wrong, the stock is going up, and it is an ever-growing money machine. That could be very true, but I rarely hear the critical side of this argument.
Are Apple investors asking the following questions?
What if Ipod sales taper?
What if the Android mobile platform starts eating into the Iphone market share?
What if Kindle app on most devices proves more popular than Ibook?
What if other tablets such as the rumored Google tablet start competing aggressively against the Ipad?
A little more water in the Apple Kool-Aid might be appropriate at this point. What do you think?
Disclaimer: No position in Apple at this time.
Reader Comments (14)
My biggest problem with apple is that its not open source. They are locking their technology. I don't understand why people keep buying it?!?! But! their marketing is great. Every time they go down I sell short, and put a stop at 52 week high, might die from small cuts, but will take that chance.
You are right their marketing is incredible. I hope you were short coming in the day. I had no position.
yep. but, with my luck it might not be the top.
got long gs too. first time in my life. watch it go to $0 :)
Looks good!
I saw Blankfein's face on every newspaper that hoi polloi reads in the subway, I figured its all a show, time to get in. On Appl the jury is still out.
I agree, way too early for Apple. Worth monitoring. The company is firing on all cylinders.
MY God! That was the only time I got lucky on GS stock! I had a sell order for 160!
bought back 148
Doing good Arthur.
I am starting to be more comfortable with my AAPL short, I see a divergence with relative strength to the market starting to happen. As to Goldman, its all up to showman. I got long the minute the negative article on Bloomberg came out saying that it would be foolish to buy now, because some prosecutor would want to be next Giuliani. I figured someone who wanted to get long had to feed this story. Time will tell. stop bellow 140.
Couldn't reach apple on June 15th no one picked up the phone! so next day got rid of the short and bought. They came out with oversubscribing.... You were right, they are firing on all cylinders!
There will be a day but today is not the day! ;-)
Went into the store today, spoke to my spies (employees :)) they said the over-subscription was unprecedented and they haven't seen anything like this before, I think its alllll due to parallel export . People are buying for export. I will keep a tight stop on that long and get out at $300.